ARM Makes a Play in Videogame-Lighting Technology

LONDON—"Battlefield 3," "Need for Speed Rivals" and "Medal of Honor: Warfighter" are favorites of gamers, but the small British technology firm behind the lighting effects in those best-selling titles is probably not as well known.

Friday, Cambridge, England-based chip-design giant ARM Holdings PLC added to its growing mobile-graphics expertise by snapping up Angle PLC’s Geomerics—also based in the tech-centered southern England city—for £6.2 million ($10.1 million). Geomerics said it has been a partner of ARM for more than two years and now will be a subsidiary. Terms weren't disclosed.

ARM’s deal, while small in size, is a key strategic move. It is the third acquisition made under Chief Executive Simon Segars, who started his role in July, and marks ARM’s first foray into computer gaming. Investors approved, sending ARM shares up nearly 5% in afternoon London trading.

Best known for designing processors used in most of the world’s smartphones, including Apple Inc.’s iPhone, ARM is focused on creating chips that can handle advanced graphics, including console-quality images seen in the growing mobile-gaming market. Chip makers such as Qualcomm Inc. and Nvidia Corp. are pursing advanced mobile technology as well.

Demand for higher-end processors, which power interactive media and graphics, is boosting ARM’s business. Apple's new iPhone 5S, launched in September, uses a 64-bit ARM-based chip—the first used in a phone and seen as ideal to power next-generation mobile games.

ARM said teaming up with Geomerics would “boost its position in the visual computing and graphics industries.” Otherwise put, it wants to ensure its patented chip architecture is up to speed with the latest visual-graphics technology.

Geomerics uses what it calls Enlighten, a “real-time global illumination technology” for graphic artists in the gaming and entertainment industries, to create realistic 3-D environments in which reflections and shadows fall and move correctly.

“The innovative technologies being developed by Geomerics are already revolutionizing the console gaming experience and are set to rapidly accelerate the transition to photo-realistic graphics in mobile,” said Pete Sutton of ARM’s media-processing division.

“Enlighten has helped EA provide new levels of realism and gameplay experience in titles such as our highly popular 'Battlefield' franchise,” said Carl Almgren, head of development at Frostbite, a game engine of EA Digital Illusions Creative Entertainment.

In October, ARM predicted global smartphone demand would rise more than 20% over the next three to five years. As mobile chips accommodate ever-more-advanced graphics, the companies expect the shift from console to mobile gaming will be a key trending plank.